Demat gold finds favour with investors, brisk trade on Day 1

By Sangeetha G Mar 18 2010 , Chennai

National Spot Exchange (NSEL) is offering demat gold in smaller denominations and the product

has received quick acceptance among retail investors.

On the first day of its launch on Thursday, the contract recorded a trade volume of 43,438 units valued Rs 7.40 crore. The product is designed to reach the masses, who can invest in gold of 1 gm denomination and multiples thereof. Before this, the exposure of commodities market participants in India has been limited to commodity futures contract, physical commodity and exchange-traded fund gold.

“The sum of demat accounts maintained with depositories is around 1.65 crore. Most of the retail investors either purchase stocks using their demat account or purchase units of mutual funds. In India, the time-honoured ancestral wisdom places a high premium on buying precious metals as investment and every household in India invests in gold or silver of one form or the other. Thus, the potential for demat accounts in commodities is at least four to five crore over a period of next three years. This is a great business opportunity for large number of DPs (depository participants) and retail broking houses,” said Anjani Sinha, managing director and chief executive officer, NSEL.

Globe Capital, Religare, Karvy, Goldmine, IL&FS, Monarch capital, SMC and SSD Securities have been empanelled with NSEL

as DPs.

An investor can trade in this product after opening a demat account with any of these DPs. Physical delivery of gold is possible in the form of gold bars or coins from Ahmedabad, Mumbai and Delhi. NSEL is also in the process of expanding its delivery facilities to other locations. NSEL is present in 11 states with 23 commodities, 49 delivery centres and 194 commodities contract. Government organisations such as MMTC, PEC, Cotton Corporation of India, Nafed and FCI are members of NSEL.

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